Hometown Auto Retailers Reports 2001 Annual Results and Restates Annual Results for 2000 and 1999
WATERTOWN, Conn.--May 28, 2002--Hometown Auto Retailers Inc. (OTC BB: HCAR)(OTC BB: HCARE) Tuesday announced audited financial results for the year ended Dec. 31, 2001 and restated annual results for 2000 and 1999.Hometown reported revenues of $275.8 million in 2001 versus restated revenues of $279.4 million in 2000, a decrease of 1.3 percent. Gross profits for 2001 increased $1.9 million or 5.0 percent to $39.8 million versus restated gross profits of $37.9 million in 2000. Cash and cash equivalents at the end of 2001 had increased to $4.4 million up from $586,000 at the end of 2000.
During 2001, the company incurred a net loss of $2.1 million or $0.32 per share compared to a restated net loss of $3.8 million or $0.63 per share in 2000.
However, the majority of Hometown's net loss in 2001 can be attributed to the one-time, non-cash write-off of $3.3 million ($2.1 million after tax) that occurred in the third quarter of 2001 (ended Sept. 30) due to the closing of CarDay Inc., an Internet company that Hometown held a minority interest in at its closing. (Hometown's minority interest in CarDay came as a result of its startup investment. The limited investment was substantially written up in 2000 by Hometown when institutions purchased approximately 85 percent of CarDay for approximately $25 million.)
"Despite the difficult year suffered across virtually all segments of the U.S. economy, Hometown finished 2001 on very good financial ground and is well positioned for a strong year in 2002," said Corey Shaker, president and chief executive officer of Hometown.
"The steps that we have taken during the past 12 to 24 months to improve operations have borne fruit as shown in the dramatic increase in cash and cash equivalents on hand at the end of 2001. We are also reporting an increase in high-end margin products and services, including used car sales and in our parts and service departments, as well as an increase in gross profits.
"All of this in a tough economic year when we also had one less dealership generating revenues for the bulk of the year since we sold Morristown Lincoln Mercury in January 2001."
Hometown sold 4,874 used vehicles at retail in 2001, an increase of 325 vehicles versus the 4,549 used vehicles at retail sold by Hometown in 2000. This 2001 total represents the greatest amount of used vehicles sold at retail by Hometown in its five-year existence, which is significant since used vehicles sold at retail tend to generate the highest margins of any vehicles sold by automobile dealers.
Hometown had 14,209 total vehicles sold in 2001 (including new, used vehicles at retail, and used vehicles at wholesale) a decrease of 279 versus the 14,488 total vehicles sold by Hometown in 2000.
Sales of new cars decreased $14.0 million or 8.1 percent to $158.8 million for 2001 compared to $172.8 million in restated new car sales in 2000. Used car sales in 2001 increased by $8.3 million or 11.0 percent to $83.9 million compared to $75.6 million in restated new car sales in 2000.
Parts and service revenues in 2001 increased 6.3 percent to $25.4 million for 2001 compared to $23.9 million for restated parts and service revenues in 2000. Other revenues (net) increased $499,000 or 7.0 percent to $7.6 million in 2001 compared to $7.1 million in restated other revenues (net) in 2000.
Revenues for the quarter ended Dec. 31, 2001 were $69.1 million compared to restated revenues of $61.1 million for the same period in 2000. Gross profit for the quarter increased to $9.2 million from restated gross revenues of $7.8 million for the same period in 2000.
Net loss for the quarter was $1.2 million or $0.17 per diluted share (an improvement of $2.4 million) compared to the restated net loss of $3.6 million or $0.61 per diluted share for the same period in 2000.
Prior to the end of 2001, the company determined that (1) operating leases at two of the company's dealerships should have more appropriately been classified as capital leases, (2) certain manufacturer incentives should have been more appropriately reflected as a reduction of inventory costs, and (3) certain insurance product sales generated in Connecticut, which were recognized at the time of the sale, should have been recognized over the life of the contract due to operating under a "dealer obligor" status according to Connecticut state law.
As a result, Hometown has restated prior year financial statements.
The results of revisiting each of these specific areas in its current and previous reports (as outlined in the previous paragraph) are as follows:
1. A reduction in basic and diluted earnings per share of $0.02, $0.02 and $0.01 for the years ended Dec. 31, 2001, 2000 and 1999, respectively.
2. An increase in basic and diluted earnings per share of $0.03 for the year ended Dec. 31, 2001 and a decrease in basic and diluted earnings per share of $0.02 and $0.01 for years ending Dec. 31, 2000 and 1999, respectively.
3. An increase in basic and diluted earnings per share of $0.01, $0.01 and $0.00 for each of the years ended Dec. 31, 2001, 2000 and 1999, respectively.
The cumulative effect of each of these changes was to increase net income $170,000 and basic and diluted earnings per share $0.03 for the year ended Dec. 31, 2001 and reduce net income $218,000 and $144,000 and basic and diluted earnings per share $0.03 and $0.02 for years ended Dec. 31, 2000 and 1999, respectively.
"Many of the revisions were due to modifications in accounting treatments," Shaker said. "We are firmly committed to providing accurate, reliable and timely financial information to our shareholders, and we are confident that we have positioned the company properly for 2002 and beyond."
About Hometown
Hometown Auto Retailers (www.htauto.com) sells new and used cars and light trucks, provides maintenance and repair services, sells replacement parts and provides related financing, insurance and service contracts through 10 franchised dealerships located in New Jersey, New York, Connecticut, Massachusetts and Vermont.
The company's dealerships offer 12 American and Asian automotive brands, including Chevrolet, Chrysler, Daewoo, Dodge, Ford, Isuzu, Jeep, Lincoln, Mazda, Mercury, Oldsmobile, and Toyota.
Hometown is also active in two "niche" segments of the automotive market: the sale of Lincoln Town Cars and limousines to livery car and livery fleet operators and the maintenance and repair of cars and trucks at a Ford and Lincoln Mercury factory authorized free-standing service center.
This release contains "forward-looking statements" based on current expectations but involving known and unknown risks and uncertainties. Actual results or achievements may be materially different from those expressed or implied.
The company's plans and objectives are based on assumptions involving judgments with respect to future economic, competitive and market conditions, its ability to consummate, and the timing of, acquisitions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the company.
Therefore, there can be no assurance that any forward-looking statement will prove to be accurate.
HOMETOWN AUTO RETAILERS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
For the Years Ended Dec. 31,
------------------------------------
2001 2000 1999
(Restated) (Restated)
Revenues -------- ------------- ----------
New vehicle sales $ 158,825 $ 172,759 $ 173,427
Used vehicle sales 83,903 75,623 82,224
Parts and service sales 25,402 23,869 22,735
Other, net 7,630 7,131 6,929
Total revenues 275,760 279,382 285,315
Cost of sales
New vehicle 148,271 161,752 162,062
Used vehicle 76,189 68,981 75,385
Parts and service 11,485 10,768 9,814
Total Cost of sales 235,945 241,501 247,261
Gross profit 39,815 37,881 38,054
Amortization of goodwill 704 661 600
Loss from operations of
e-Commerce subsidiary -- -- 515
Selling, general and
administrative expenses 35,114 37,946 31,499
Income (loss) from
operations 3,997 (726) 5,440
Interest income 90 1 41
Interest expense (4,225) (5,069) (4,116)
Other income 254 -- --
Other expense (8) (23) (31)
Valuation adjustment for
CarDay.com (3,258) -- --
Income (loss) before taxes (3,150) (5,817) 1,334
Provision (benefit) for income
taxes (1,014) (2,017) 693
Net income (loss) $ (2,136) $ (3,800) $ 641
Earnings (loss) per share,
basic $ (.32) $ (.63) $ .11
Earnings (loss) per share,
diluted $ (.32) $ (.63) $ .11
Weighted average shares
outstanding, basic 6,592,436 5,995,996 5,875,342
Weighted average shares
outstanding, diluted 6,592,436 5,995,996 6,003,851
HOMETOWN AUTO RETAILERS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
Dec. 31,
--------------------------
ASSETS 2001 2000
(Restated)
Current Assets: ----------- -------------
Cash and cash equivalents $ 4,446 $ 586
Accounts receivable, net 5,656 6,149
Inventories, net 31,887 40,170
Prepaid expenses and other current
assets 344 326
Deferred income taxes and taxes
receivable 1,681 956
Total current assets 44,014 48,187
Property and equipment, net 11,889 12,462
Goodwill, net 23,708 24,793
Other assets 2,231 6,130
Total assets $ 81,842 $ 91,572
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Floor plan notes payable $ 32,553 $ 40,123
Accounts payable and accrued expenses 6,160 5,267
Current maturities of long-term debt
and capital lease obligations 709 620
Deferred revenue 476 514
Total current liabilities 39,898 46,524
Long-term debt and capital lease
obligations 12,797 13,390
Long-term deferred income taxes 721 1,664
Other long-term liabilities and
deferred revenue 974 1,351
Total liabilities 54,390 62,929
Stockholders' Equity:
Preferred stock, $.001 par value,
2,000,000 shares authorized, no shares
issued and outstanding - -
Common stock, Class A, $.001 par value,
12,000,000 shares authorized, 3,561,605
and 2,301,109 issued and outstanding,
respectively 3 2
Common stock, Class B, $.001 par value,
3,760,000 shares authorized, 3,613,500
and 3,699,000 issued and outstanding,
respectively 4 4
Additional paid-in capital 29,730 28,786
Retained earnings (accumulated deficit) (2,285) (149)
Total stockholders' equity 27,452 28,643
Total liabilities and stockholders'
equity $ 81,842 $ 91,572